Lollapalooza expected to deliver big weekend for Chicago hotels, even as business travel lags

Lollapalooza concertgoers are expected to pack downtown hotels this weekend, capping a busy summer tourism season that got a boost from a series of Soldier Field concerts featuring Taylor Swift and Beyoncé, as well as mega-events such as the NASCAR Chicago Street Race. But hoteliers, who are still recovering from the COVID-19 crisis, say Lollapalooza may be the most important event.

“The summer really has become the make-it or break-it time for Chicago hotels, but Lolla is a blowout, it’s always a blowout,” said Maverick Hotels and Restaurants CEO Robert Habeeb, the proprietor of the 223-room Sable at Navy Pier. “And the Lolla crowds are big spenders.”

The four-day Grant Park festival starts Thursday at noon and will feature headline acts such as Kendrick Lamar, Billie Eilish, Lana Del Rey, Thirty Seconds to Mars and Red Hot Chili Peppers. Chicago tourism officials said last year’s event attracted roughly 100,000 people each day.

A great summer doesn’t mean Chicago hotels have no worries. Some were pushed into foreclosure during the COVID crisis, and business travel is still significantly lower than it was before 2020. But coupled with the return of conventiongoers to McCormick Place and other local venues, a healthy tourist season at least puts a recovery in sight.

“Overall, the market in Chicago is back almost to 2019 levels,” said Michael Reschke, CEO of The Prime Group and developer of The LaSalle Chicago, a 232-room hotel at 208 S. LaSalle St. “Business travel is not back yet to pre-COVID levels, but leisure travel has made up for it, and Lolla is always a strong weekend.”

The only real worry hotel operators have on Lollapalooza weekends is the weather.

“We always pray it doesn’t rain, because there’s nothing worse than people coming back to the hotel with muddy shoes,” Reschke said.

[ Illinois tourism on the road to recovery as hotel revenue breaks pre-pandemic record in 2023 ]

In the first half of 2023, total hotel room demand for Chicago was 4.98 million room nights, 18% more than 2022 and almost 90% of the demand seen over the same period in 2019, said Lynn Osmond, president and CEO of Choose Chicago, the city’s official tourism agency.

“Thanks in part to these concerts as well as meetings and events across the city, including some record-setting conventions at McCormick Place, the first half of the year was strong for our hotels and the entire tourism industry,” she said.

Swift kicked off June with three sold-out shows. Thousands of Swifties descended on downtown hotels, and business didn’t slow down. Hotel room demand for the month hit 1.11 million, driving the overall occupancy rate up to 80.4%, the highest level since the pandemic began, according to Choose Chicago.

“We’ve seen the Taylor Swift effect across the nation, and it’s been remarkable,” said Brian Arevalo, senior vice president of HVS, a hospitality industry consultant. “Her Eras Tour is pulling in numbers we usually associate with the Super Bowl or World Series.”

Swifties, other concertgoers and tourists also seem willing to open their wallets, he added. They’re paying higher rates than ever, and that helps make up for the business travel slowdown.

Choose Chicago data show hotel revenue for the first six months of 2023 totaled a record $1.12 billion, 24% higher than last year and slightly more than the same period in 2019.

Final July occupancy and revenue numbers aren’t in yet, but hotel operators say events such as NASCAR, held on the lakefront over the July 4 weekend, should result in another strong month. Habeeb said the NASCAR race may have discouraged some potential visitors who typically travel to Chicago for the Fourth, so it might work better on a slower weekend, especially since, unlike the big-spending Swifties and Lollapalooza attendees, racegoers were more likely to hunt for bargains outside downtown.

“It was the kind of crowd that was willing to pay a lot to attend the race, but also goes out to stay in the suburbs,” he said.

[ NASCAR weekend boosted Chicago hotel occupancy to 79%, a ‘modestly solid’ success that fell short of Taylor Swift ]

Those attending conventions or other group meetings are another pillar of support for Chicago hotels, and they’re returning as well. Through the first half of 2023, demand from these visitors totaled 1.56 million room nights, 28% more than 2022 and 92% of the level seen over the same period in 2019, according to Choose Chicago.

Cynthia McCafferty, a spokesperson for the Metropolitan Pier and Exposition Authority, the municipal corporation that owns McCormick Place, said many 2023 events, including the American Library Association’s six-day conference in June, are attracting far bigger crowds than last year, and others, such as the American Society of Clinical Oncology, which held its annual meeting the first week of June, are breaking their attendance records from 2019.

“Taylor Swift gets a lot of the credit, but the fact that we had tens of thousands of oncologists here also helped,” she said. “It’s not just the Swifties.”

Business travel remains the missing piece for the hotel industry, and it may not fully recover if companies decide online meetings through Zoom or other services can replace some face-to-face meetings, Arevalo said.

Habeeb estimates business travel is stuck at about 80% of pre-pandemic levels but said he’s confident companies will eventually put people back on the road.

“Some people believe this is the new normal, but I’m not one of them,” he said. “I tend to believe it’s just a sector that’s been slower to respond.”

But the rise of remote work does have a silver lining for hotels, Reschke said. People are freer to travel and do their work from other cities, and ever since the pandemic, he’s noticed more guests mixing business and leisure. These “bleisure” travelers sometimes bring their families, work from the hotel for a few days, and then take some time off.

“You can work and have a nice five-day weekend in Chicago,” he said. “I think that business is here to stay.”